In July 2021, the first payments of the expanded Child Tax Credit were delivered to 59.3 million children nationwide as part of ongoing economic relief efforts amidst the COVID-19 pandemic. The American Rescue Plan, passed in March, made three important changes to the Child Tax Credit for 2021: increasing benefit levels; expanding access to reach children in families with the lowest incomes; and paying the benefit out in monthly installments.
Using our novel approach to tracking monthly poverty rates, we project that ongoing COVID relief efforts continue to have a sizable effect on reducing child poverty keeping 6 million children from poverty in July 2021 alone (a reduction of more than 40 percent). This impact also resulted in a notable drop in child poverty between June and July 2021, due primarily to the rollout of the expanded Child Tax Credit. On its own, this new payment kept 3 million children from poverty in its first month.
As rollout continues, the expanded Child Tax Credit has the potential to achieve even greater child poverty reduction. If all likely-eligible children are covered, it has the potential to reduce monthly child poverty by up to 40 percent on its own; in combination with all COVID-related relief, it could contribute to a 52 percent reduction in monthly child poverty. Expanding coverage to all eligible children is key to achieving the Child Tax Credit’s full anti-poverty potential, with the greatest gains to be realized for Black and Latino children.
Measuring Monthly Poverty
In 2020, we established a novel method to estimate monthly Supplemental Poverty Measure (SPM) poverty rates. Using a monthly framework, we are able to track poverty amidst changing economic circumstances, for example as the COVID-19 pandemic and federal policy responses to it evolved. Visit our data page to see monthly poverty information for the U.S. population as a whole, as well as by race/ethnicity and age groups.
Suggested Citation:
Parolin, Zachary, Sophie Collyer, Megan A. Curran, and Christopher Wimer. 2021. Monthly poverty rates among children after expansion of the Child Tax Credit. Poverty and Social Policy Brief. New York: Center on Poverty and Social Policy, Columbia University.
Published August 20, 2021